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If there is a lifetime cumulative total (IHTM14501) which is lower than the threshold at the date of death and the conditions at IHTM26131 are satisfied, the cumulative total has to be deducted from the threshold. The calculation is then similar to the one used where there is no lifetime cumulative total (IHTM26142) but with the unused balance of the nil rate band substituted for the threshold.

Example

The facts are as in Example 1 at IHTM26142 - Trevor died on 1 May 2000 - but with a lifetime cumulative total (including potentially exempt transfers (IHTM04057)) of 拢80,000.

The grossing calculation is:

Total value of chargeable specific gifts (IHTM26011) = 拢264,000

Deduct unused balance of nil-rate band (拢234,000 minus cumulation of 拢80,000) -拢154,000

Excess = 拢110,000

Excess of 拢110,000 脳 (100 梅 60) = 拢183,333

Add unused balance of nil rate band +拢154,000

Grossed up value of chargeable gifts = 拢337,333

You can check the grossing calculation in the following way:

To find the tax on the grossed-up value of 拢337,333 add the cumulation of 拢80,000 which equals 拢417,333. Deduct the nil-rate band of 拢234,000 and the result is 拢183,333

Tax at 40% on 拢183,333 is 拢73,333

Deduct that tax from the grossed-up value of the gifts (拢337,333 - 拢73,333)

The result is the starting value of the chargeable gift 拢264,000.

The free estate assessment on Trevor鈥檚 death is based on the following figures:

Capital value now liable (that is grossed up value of the chargeable specific gifts) = 拢337,333

Lifetime cumulative total = 拢80,000

Settled property (IHTM16000) = 拢250,000

Aggregate chargeable transfer is 拢667,333.